The design of effective mechanisms to shape hospital capital expansion is dependent upon developing a deeper understanding of their investment behavior and its response to existing regulation. This study will examine trends in the total amount and composition of capital investment by the voluntary sector of short-term general and other special hospitals in Massachusetts over the period 1967-76, and will attempt to determine the impact of the Commonwealth's Certificate-of-Need program on this investment. It will place particular emphasis on establishing whether, since the institution of CON in 1972, a shift has occurred away from investment in additional beds towards greater real capital expenditure per bed and perhaps greater increase in personnel and other operating costs attendant to capital expansion. Differences among teaching versus non-teaching hospitals and hospitals in the greater Boston area versus the rest of the state, both in terms of investment behavior and response to CON, will be noted. The methodology employed will combine an analysis of detailed information on hospital investment obtained from the Massachusetts Rate Setting Commission with an in-depth case study examination of selected capital projects from the "per-CON period" 1967-71, the "early CON period" 1972-73, and the "mature CON period 1976-77. The feasibility and likely impact of a number of possible alternative strategies for controlling hospital capital investment will also be explored.